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The average net profit of a firm is ₹84,000 per annum. capital invested in business is ₹5,00,000.the rate of return in such business is 12%. partners are paid ₹12,000 for remuneration. calculate the value of goodwill by capitalisation of super profit method.?
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The average net profit of a firm is ₹84,000 per annum. capital investe...
Calculation of Goodwill by Capitalisation of Super Profit Method

Given Data:
- Average Net Profit = ₹84,000 per annum
- Capital Invested = ₹5,00,000
- Rate of Return = 12%
- Partners' Remuneration = ₹12,000

Step 1: Calculate Normal Profit
Normal Profit = Capital Invested * Rate of Return
Normal Profit = ₹5,00,000 * 12% = ₹60,000

Step 2: Calculate Super Profit
Super Profit = Average Net Profit - Normal Profit
Super Profit = ₹84,000 - ₹60,000 = ₹24,000

Step 3: Capitalisation of Super Profit
Goodwill Value = Super Profit * 100 / Rate of Return
Goodwill Value = ₹24,000 * 100 / 12% = ₹2,00,000
Therefore, the value of goodwill by capitalisation of super profit method is ₹2,00,000. Goodwill represents the intangible value of a business that goes beyond its tangible assets. In this method, the super profit (profit above the normal return on investment) is capitalized at the rate of return to determine the goodwill value. This helps in assessing the additional value generated by the business due to factors like reputation, customer base, or unique business practices.
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The average net profit of a firm is ₹84,000 per annum. capital invested in business is ₹5,00,000.the rate of return in such business is 12%. partners are paid ₹12,000 for remuneration. calculate the value of goodwill by capitalisation of super profit method.?
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The average net profit of a firm is ₹84,000 per annum. capital invested in business is ₹5,00,000.the rate of return in such business is 12%. partners are paid ₹12,000 for remuneration. calculate the value of goodwill by capitalisation of super profit method.? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The average net profit of a firm is ₹84,000 per annum. capital invested in business is ₹5,00,000.the rate of return in such business is 12%. partners are paid ₹12,000 for remuneration. calculate the value of goodwill by capitalisation of super profit method.? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The average net profit of a firm is ₹84,000 per annum. capital invested in business is ₹5,00,000.the rate of return in such business is 12%. partners are paid ₹12,000 for remuneration. calculate the value of goodwill by capitalisation of super profit method.?.
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